Minimum Payment
Financial term in the General category
Definition
The smallest amount you must pay each month to keep the account in good standing, typically 1-3% of the balance or $25-35, whichever is greater. Paying only the minimum results in expensive long-term interest.
Related Terms
Statement Balance
The total amount owed on a credit card at the end of the billing cycle. Paying this amount in full by the due date avoids interest charges and maximizes the grace period.
Credit Card Debt
Money owed on credit cards that carries over from month to month, accruing interest. The average American household carries over $6,000 in credit card debt at 20%+ APR.
Frequently Asked Questions
What is Minimum Payment?
The smallest amount you must pay each month to keep the account in good standing, typically 1-3% of the balance or $25-35, whichever is greater. Paying only the minimum results in expensive long-term interest.
Why is Minimum Payment important in personal finance?
Minimum Payment is an important general concept that helps individuals make better financial decisions. Understanding Minimum Payment can improve your financial planning and help you achieve your money goals.
How does Minimum Payment relate to Statement Balance?
Minimum Payment and Statement Balance are related financial concepts. The total amount owed on a credit card at the end of the billing cycle. Paying this amount in full by the due date avoids interest charges and maximizes the grace period.
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